Third-Party Logistics (3PL) providers are essential for eCommerce businesses; they hold your product and are the last party to touch your product before it reaches your consumer. However, finding the right 3PL provider can be challenging. Whether you suffer a breach of trust, want to expand into a new location, or have simply outgrown your existing provider, it may be necessary to switch to a new 3PL to ensure optimal supply chain performance. In this blog post, we will discuss when you should look for a new 3PL and how Capabl can help you find the right provider for your business.
The most common reason why eCommerce businesses switch 3PL providers is due to inadequate service levels. The most common issues are around on time fulfillment and order accuracy. These metrics have a direct impact on how your consumer views your brand and while it’s understandable that mistakes may occasionally happen, a provider with a habit of bad performance can negatively impact your business. One of the key ways to guard against this is regularly reviewing SLA performance by either spending a few hours a month doing those calculations yourself or relying on an automated fulfillment scorecard like Capabl. If you find that your current 3PL provider is consistently falling short of your service level expectations, it may be time to consider switching to a new provider.
Another reason why eCommerce businesses may need to switch 3PL providers is due to capacity issues. If your current 3PL provider is unable to handle your growing order volume or inventory storage needs, it can lead to stockouts, delayed order fulfillment, and other issues. Securing the right level of adequate abor is usually the most difficult aspect running an operation and if you find that your current provider is struggling to keep up with your demand, it may be time to consider switching to a new provider with more capacity.
Communication is key to a successful partnership between an eCommerce business and a 3PL provider. You may have good communication during the sales process or when things are going well, but you oftentimes don’t really get the measure of an operation until you’re both dealing with some adversity. If your current 3PL provider is unresponsive, uncommunicative, or difficult to work with, it can make it challenging to resolve issues and improve supply chain performance. If you find that communication with your current provider is consistently poor, it may be time to switch to a new provider that offers better communication and customer service if things can’t be resolved.
Technology plays a significant role in eCommerce, and it's essential to have a 3PL provider that can integrate with your systems and technologies seamlessly. The baseline expectations that a brand should have of their 3PL is that they are able to send and receive orders. However in an era where brands are used to tools like Klaviyo or Shopify your fulfillment center should also provide robust reporting and data visualizations. If your current 3PL provider is falling short in this area you could look at building a custom dashboard via Looker or Tableau or utilize a purpose-built fulfillment analytics platform like Capabl.
Finally, cost-effectiveness is an essential consideration when evaluating your current 3PL provider. There are almost as many pricing models and costing tiers out there as 3PLs, and it’s important that you feel you are getting a fair value with your relationship. As an example, if you’re a luxury brand you may pay extra to have stronger security, kitting, or quality control capabilities than if you were working with a provider whose main selling point was cost and may accept a lower SLA threshold as an example. If you find that your current provider is charging more than your budget allows, or if you're not receiving the value you expect for the cost, it may be time to switch to a new provider. A good 3PL provider should offer competitive rates and provide value for the services they provide.
Switching 3PL providers can be a challenging process, but Capabl can help make it easier. Capabl offers automated scorecards and analytics for eCommerce fulfillment for D2C brands, providing insights into the performance of your 3PL provider. With Capabl, you can track key metrics, such as order fulfillment speed, order accuracy, inventory management, customer support, and cost-effectiveness. Capabl provides you with actionable insights and recommendations that you can use to improve supply chain performance and find the right 3PL provider for your business. To support your search, Capabl has teamed up with Izba to create the Izba Exchange which is a free database of over 2200 fulfillment providers globally.
Switching to a new 3PL provider can be a challenging decision, but it's essential to ensure optimal supply chain performance. If you find that your current 3PL provider is falling short of your expectations, it may be time to consider switching to a new provider. By using the metrics outlined in this blog post and leveraging Capabl's insights, you can make an informed decision about when to switch and find the right provider for your business. Don't let poor service levels, capacity issues, poor communication, outdated technology, or a lack cost-effectiveness be something that holds your supply chain back.
